Govt on Monday sought parliament's approval to cut the government's stake in top lender State Bank of India to 51 percent from 55 percent.
Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/Govt-seeks-to-cut-stake-in-State-Bank-to-51-pct-/articleshow/5657818.cms
GOVT. SEEKS TO CUT STAKE IN STATE BANK TO 51%
SBI SHORTLISTS VISA, RBS, GLOBAL PAYMENTS FOR PoS PARTNERSHIP
SBI has shortlisted three candidates - Visa, Royal Bank of Scotland (RBS) and Global Payments - as potential partners for a joint venture that will install five lakh swipe machines for credit and debit cards across the country.
After putting in place a core-banking solution, SBI has been in a hurry to acquire leadership position in electronic networks as well. SBI, which has over 20,000 ATMs, has long overtaken ICICI Bank in ATMs.
Electronic swipe machines known as point of sales or POS Terminals, besides increasing acceptance for a bank’s credit cards also earn a revenue for the bank out of every transaction.
Each time a card is swiped, the merchant pays a small per cent of the transaction in the form of a merchant discount rate. The money is shared between the card issuing bank and the bank that owns the POS terminal and small portion goes to the payments provider, either Visa or Mastercard.
What makes POS terminals big business are two recent developments. First, RBI has said it will allow small cash withdrawals through such POS terminals. Secondly, it has said it would encourage banking correspondents to increase financial inclusions.
In the banking industry, retailers with a swipe terminal are seen as ideal banking correspondents as they can facilitate payments and withdrawals in unbanked areas as long as there is telephone connectivity.
SBI is likely to seek a brand premium from the partner since the bank will be lending its name to the business. The bank will also be actively involved in acquiring merchant establishments and will receive some kind of payments for services provided.
BANKERS WANT FLEXIBILITY IN SHORT TERM LOAN PRICING
Several banks have decided to come together to tell RBI that they should be given more flexibility in pricing short-term loans once the new system of base rate comes into effect.
RBI deputy governor Subir Gokarn will meet CEOs of large commercial banks on Friday to finalise the draft circular on base rate — the new system proposed to calculate lending rates. Base rate will be calculated taking into account the cost of deposits, profit margin and establishment cost, among other things. Unlike the benchmark prime lending rate (BPLR), base rate will not factor in the risk element. The risk premium will be mark-up over base rate.
The earlier draft by RBI stated that the base rate of most banks is expected to be in the range of 8.5-9.5%. Even if the base rate is in the range of 8-10%, banks fear they may lose business to mutual funds and non-banking finance companies as most corporates will look at cheaper ways of raising money.
As of now, PLR of most banks is in the range of 11.75-12.25% and 70% of loans are given below PLR. For instance, banks have given short-term loans (six months to one year) to corporates at rates ranging from 7-10%, depending on borrowers’ risk profile while home loan borrowers are charged between 8% and 10%. Bankers said surplus liquidity in the system and poor demand for loan drove them to lend below PLR.
State Bank of India has also suggested that banks should have the flexibility to lend below the base rate to their employees and for loans against fixed deposits. SBI provides home loan to their employees at a simple interest rate of around 6%. Also, it gives loan against FDs at a mark up over the FD rate. In fact, most banks provide loan to employees at much lower rate than their PLR.
Banks are likely to ask for more time to implement the base rate system, which, according to the draft note, will come into effect from April 1, 2010. However, RBI deputy governor Usha Thorat recently told the media that the implementation of the base rate could get delayed.
Bankers may also seek clarification on cost of deposit calculation. While the earlier draft said the one-year deposit rate should be taken into account to calculate the cost, the second draft just mentioned cost of deposits — thereby giving each bank the option to take average cost of deposits, one-year cost or the incremental cost. Bankers fear this may lead to a distortion in the base rate pricing.
NEW BANKS MAY HAVE TO SERVE RURAL STINTS
New banking licences may turn out to be a dampener for hopefuls such as Reliance Capital, Cholamandalam and Tata Finance, as RBI, in consultation with the government, is planning to restrict fresh entrants to rural and semi-urban areas in the initial years.
A finance ministry official told ET "“New entrants may only be allowed to open branches in rural areas for the first two years and the subsequent spread will depend on the basis of their direct lending to the agriculture sector, opening of no-frill accounts, and other financial inclusion criteria”.
As per the budget announcement, both the government and RBI will work together to provide appropriate banking facilities to areas having population in excess of 2,000 by March 2012.
RBI feels the thrust towards financial inclusion from the private sector has been very low. As per RBI data, while the 27 public sector banks have opened 13,381 branches so far in rural areas, the 22 private sector banks, both old and new, are far behind with 1,113 branches.
BASE RATE SYSTEM FROM JULY 1, 2010: RBI
As per the Press Release No. 2009-2010/1208 issued by RBI, the Base Rate System would be introduced from July 1, 2010. A final circular on the Base Rate System will be issued shortly taking into account comments received from various stakeholders and the discussions with banks. This was decided at a meeting with bankers held at the Reserve Bank of India, Mumbai.
It may be recalled that the Reserve Bank had placed the draft circular on the Base Rate on its website on February 10, 2010 for inviting comments from various stakeholders. The Reserve Bank had received many comments/suggestions from various stakeholders. In order to take a final view on the Base Rate, the Reserve Bank held a meeting with select public sector, private sector and foreign banks.
CENTRAL BANK OF INDIA DONATES RS. 15 LAKHS FOR OPHTHALMIC HOSPITAL, PALAKKAD DISTRICT, KERALA
Central Bank of India donated Rs.15 lakhs to M/s.Ottapalam Welfare Trust as a part of its corporate social responsibility. The amount would be utilized by the Trust for construction of an operation theatre in the Ophthalmic Hospital being constructed at Ottapalam, Palakkad District Kerala.
Ottapalam Welfare Trust is a trust functioning under the guidance of many eminent personalities hailing from Kerala. Established in 2001, the Trust aims to serve the weaker sections of the society especially women, children and elderly persons. It focuses on two key areas viz. employment and health care. Under the employment portfolio the Trust has taken up micro credit scheme as an instrument of development, which presently covers over 10,000 beneficiaries.
Under the health care portfolio the Trust has started an eye care hospital with an aim of bringing quality eye care of international standard to the common man free of cost. The hospital provides specialized facilities with qualified and experienced team of doctors and paramedical staff. The Trust is now putting up its own building with two operation theatres to provide 500 to 600 free cataract operations annually.
Source: https://www.centralbankofindia.co.in/upload/news/PR.pdf
Source: https://www.centralbankofindia.co.in/upload/news/PR.pdf
CENTRAL BANK OF INDIA REVISES INTEREST RATES ON DEPOSITS
Central Bank of India has revised its interest rates to be paid on time deposits w.e.f. 06.03.2010. It has revised the interest rates to be paid on deposits with maturity period of 2 years to less than 3 years from 6.75% to 7.00% and on deposits of 3 years to less than 5 years from 7.00% to 7.25%. Interest rates on other buckets remain unchanged.
Source: https://www.centralbankofindia.co.in/site/Interest.aspx
REPORTING DATE OF PROBATIONARYOFFICERS IN CENTRAL BANK OF INDIA
As per the announcement made by Central Bank of India, the successful Probationary Officers are required to report at their advised place of posting on 29.03.2010. The Bank has already despatched the appointment letters by Regd. Post to the concerned candidates.
Source: https://www.centralbankofindia.co.in/site/MainSite.aspx?status=1&menu_id=17
BANKS TRY TARGET PRACTICE WITH HIGHER BULK FD RATES
As per news item appearing in The Economic Times, Banks have once again started offering higher interest rates on bulk deposits to tide over the tight liquidity system and also to increase the size of their balance sheets. Till recently, many banks were offering lower interest rates on bulk deposits when compared with the retail deposits. In some slabs, the rates were lower by 150 basis points on bulk deposits.
Now banks begun paying 75-100 points more for wholesale deposits compared to top retail deposits.
GRATUITY TO PRIVATE SECTOR EMPLOYEES RAISED TO RS.10 LAKH
Cabinet Meeting chaired by the Prime Minister, Mr. Manmohan Singh, approved raising the ceiling for payment of gratuity from Rs.3.5 lakh to Rs.10.00 lakh, which will bring parity between the Govt. and the Private Sector Employees. Earlier the Sixth Pay Commission recommendation had raised the limit for Central Govt. Employees to Rs.10.00 lakh.
Source: http://economictimes.indiatimes.com/personal-finance/savings-centre/savings-news/Gratuity-for-private-sector-employees-raised-to-Rs-10-lakh/articleshow/5644295.cms
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